Opinion
Hearing Granted by Supreme Court Aug. 19, 1937.
Appeal from Superior Court, Los Angeles County; Ruben S. Schmidt, Judge.
Action by A. Meyers, doing business as the Western Transportation Company, against the Bank of America National Trust & Savings Association, F. C. Wascher, doing business under the fictitious firm name and style of Uptown Drug Company, and F. C. Wascher, an individual, and others. From an adverse judgment, F. C. Wascher, doing business under the fictitious firm name and style of Uptown Drug Company, and the Bank of America National Trust & Savings Association appeal.
Affirmed.
COUNSEL
Willedd Andrews, of Los Angeles, for appellant F. C. Wascher.
Louis Ferrari, of San Francisco, and Edmond Nelson and G. L. Berrey, both of Los Angeles, for appellant Bank of America Nat. Trust & Savings Ass’n.
Joe Crider, Jr., of Los Angeles (John J. Ford, of Los Angeles, of counsel), for respondent.
OPINION
McCOMB, Justice.
Defendants appeal from a judgment in favor of plaintiff after trial before the court without a jury in an action for conversion.
The essential facts are these:
Plaintiff conducted a transportation business and during the ordinary course of his business numerous checks were received payable to the "Western Transportation Company," the name under which his business was operated. A number of these checks were embezzled and negotiated by his office manager, Benedict, to defendant F. C. Wascher, a druggist doing business under the name of Uptown Drug Company. He in turn indorsed the checks and deposited them in his account with defendant bank, who presented them to the drawee, received payment, and paid defendant Wascher.
At the time of the embezzlement plaintiff carried a fidelity bond insuring him against losses through embezzlement by his employees, which bond was executed by the United States Guarantee Company, who prior to the commencement of this action paid plaintiff in full for all loss sustained by him and took from him an assignment of his rights against defendants.
Defendants rely for reversal of the judgments on these propositions:
First: The payment of plaintiff’s loss by the insurer, United States Guarantee Company, extinguished defendants’ obligations.
Second: Plaintiff was not the real party in interest and therefore could not maintain an action against defendants, since he had assigned his rights against defendants to his insurer, United States Guarantee Company.
Defendants’ first proposition is untenable. Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event. Section 22, Ins.Code (St.1935, p. 498). In the instant case the fidelity bond of the United States Guarantee Company was within this definition of an insurance contract and the law is that indemnification of the insured by his insurer does not constitute a defense to an action by the insurer on an assigned claim against the party whose wrongful act has caused the insured loss. Grubnau v. Centennial Nat. Bank, 279 Pa. 501, 124 A. 142, 143. In the case just cited, in which the facts are very similar to those in the present case, Mr. Justice Kephart, 279 Pa. 501, 124 A. 142, at page 143, says:
"It would be a novel proposition to hold that an insurance contract could reach out to indemnify a stranger, in no way a party to the insurance, whose wrongful act caused the insurance company to pay loss to the insured which would not have occurred but for the wrongful act. Such protection would be given without cost or contractual relation, merely because the person wronged chooses to collect from the insurance company first, rather than the bank which afterwards disputed the claim on this and other grounds connected with the forged check."
Defendants’ second proposition is likewise untenable. The law is settled that a defendant has a right to have a cause of action against him prosecuted by the real party in interest (section 367, Code Civ.Proc.), but this right ends when (1) a judgment for or against the nominal plaintiff will protect him from any action upon the same demand by another, and (2) when as against the nominal plaintiff he may assert all defenses and counterclaims available to him, were the claim prosecuted by the real owner (Giselman v. Starr, 106 Cal. 651, 657, 40 P. 8; Mosier v. Suburban Estates, Inc., Ltd., 137 Cal.App. 574, 575, 31 P.2d 209, 20 Cal.Jur. 490).
In the present case plaintiff was present in court, testified that he had been indemnified in full and had assigned his claim to the United States Guarantee Company, who was also represented in court by its attorneys. Hence defendants were fully protected from any future claim against them by either plaintiff or his assignee and could have urged in the present case any and all defenses which they might have presented, had the suit been brought in the name of the plaintiff’s assignee, United States Guarantee Company.
For the foregoing reasons the judgments are and each is affirmed.
I concur: CRAIL, P. J.